GIS and Business Strategy
Chapter 12 Slides from
James Pick, Geo-Business: GIS in the Digital
Organization, John Wiley and Sons, 2008.
Copyright © 2008 John Wiley and Sons.
DO NOT CIRCULATE WITHOUT
PERMISSION OF JAMES PICK
Copyright (c) 2008 by John Wiley
and Sons
Objectives of Lecture
• Evaluate the strategic and competitive role of GIS.
Consider Michael Porter’s theory of internet
strategies and the IT strategic alignment model.
• Propose an evolutionary framework for business
uses of spatial technologies
• Discuss in more detail nine case studies that
illustrate the framework.
• Discuss the overall research case-study results.
• Point out the impact of the results on the
evolutionary model
• Point to practical implications for managers
• Conclude
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Vision for Strategy
• Attaining industry leadership with spatial
technologies also requires the vision to foresee
years into the future to a spatially-enabled
business with GIS and associated technologies
providing sustained efficiency and productivity
that add value.
• This points to leaders in these firms who
fostered or developed the vision, gained
commitment of stakeholders, and led in making
it happen through implementation of the
strategies over many years.
• The intangible leadership factors are also
crucial.
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Corporate Strategy and GIS
Strategy need to be in Synchrony
• The corporate strategic plan includes the firm’s mission,
guiding objectives, mid-term milestone to reach the
objectives, sub-plan for development of employees, and
section on how stakeholders have been involved in
establishing the strategic plan (Tomlinson, 2003;
Applegate et al., 2007).
• The firm needs to have leaders in GIS who will take the
initiative to formulate strategies and gather the support of
company top leadership to include GIS in its business
strategies.
• The GIS plan needs to be in synchrony with the
corporate strategic plan. It is a breakthrough point at
which top leadership understands that GIS is strategic
for the organization (Tomlinson, 2003).
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IT Alignment Theory
• The IT strategic alignment model (Henderson and
Venkatraman, 1992; Papp, 1995; Papp, 2001; Applegate
et al., 2007) divides strategy into four quadrants -business strategy, IT strategy, organizational
infrastructure, and IT infrastructure.
• Relationships between these quadrants determine the
extent to which business and IT strategies and
infrastructure operate in synergy.
• The model postulates the closer the alignment that exists
between the quadrants, the greater the synergy.
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IT Alignment Theory (cont.)
• The model postulates the closer the alignment that exists
between the quadrants, the greater the synergy. In
aligning business and IT capabilities, for example the
business administrative structure and IT architecture
need to be consistent (Papp, 2001).
• Likewise the strategies and infrastructures need to be
consistent,
– For instance IT strategy may call for a spatially-enabled supply
chain but the IT infrastructure (people, expertise, networks, RFID
equipment) may not be sufficient to support it.
• A firm’s strengths and weaknesses in the quadrants can
help determine where investment needs to be prioritized
and what results can be expected (Henderson and
Venkatraman, 1992; Papp, 2001).
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Business-IT Strategic Alignment Model
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(Source: Papp, 2001)
Business-GIS-IT Strategic
Alignment Model
• The IT alignment model can be extended to include GIS
Strategy and GIS Infrastructure.
• Now the alignment needs to exist between six cells, which
requires more time and resources in planning, coordination,
and communication.
• If the IT and GIS functions and organizational units are
combined together, then the functional integration becomes
simpler, again with only four quadrants, and similar to the
Bus.-IT Alignment Model.
• However, based on the research cases in the book, the
GIS and IT functions are more likely to be separate, with
loose connections.
• Regardless of the arrangement, this theory stresses that
GIS strategy can succeed only if effort is made to align it
with business and IT strategies, as well as have a fit
between GIS strategy and infrastructure.
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Business-GIS-IT Strategic
Alignment Model
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(Modified from Papp, 2001)
Evolutionary Framework for
GIS Strategy
• An evolutionary framework for GIS
Strategy takes into account three key
dimensions: (1) extent that spatial
applications are customer-facing,
(2) extent that geography is part of the
industry or business, and
(3) extent that the industry or business
utilizes a spatially-enabled enterprise-wide
integration platform.
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Dimension 1 of Evolutionary
Framework
• The first dimension of the framework consists of
the extent that spatial applications in the industry
or company are directed towards a user base
that is predominantly customers (i.e. customerfacing) versus spatial applications that are
directed towards internal users.
– Internal users include executives, managers,
marketing specialists, middle-level analysts,
operations personnel, sales force, and field workers.
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Dimension 2 of Evolutionary
Framework
• The second dimension, extent of geography as part of the
business, refers to whether the major business products
and processes relate closely to geography.
– An example of an industry linked to geography is
transportation, for which the key function of moving goods,
inventory, and people is inherently tied to geography;
– Another example is the utility industry, for which the products
of energy, purified water, and essential materials are provided
through geographic networks of transmission lines, pipelines,
and specialized transport vehicles.
– Real estate, another obvious example, has land as its central
element.
• On the other hand, the legal services industry has slight
linkage with geography for its essential products and
processes.
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Dimension 3 of Evolutionary
Framework
• The extent that an industry or business
utilizes a spatially-enabled web integration
platform refers to whether it is based on
“traditional” desktop or client-server spatial
applications versus those based on the
web-based enterprise architecture
consisting of web servers, content servers,
the internet, thin and thick clients
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Evolutionary Framework of Industry Categories by 2 Spatial
Dimensions, 1995
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Evolutionary Framework of by Firms by 3 Spatial Dimensions, 2006
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Research project to classify case firms
on this framework and observe patterns
•
20 research cases were interviewed over a one year period to
determine their uses and applications of spatial technologies, users,
extent of web and location-enabling, consumer-facing vs. internal
uses, traditional vs. enterprise, costs-benefits etc.
•
The companies are a convenience sample from different industries
and firm sizes.
•
The interviewee was the person in charge of GIS at the firm.
•
The findings from the cases are useful in determining the current
configuration of spatial applications and uses by industry and to
analyze how they fit into the proposed framework.
– It will lead to more complete and larger-sample studies to determine the
industry-based evolution of spatial technologies.
•
Nine cases are discussed in more detail : Big Oil, 2 Large Banks,
Large Insurance, Rand McNally, Lamar Advertising Co, Prudential
Preferred Properties, Motion-Based Technologies
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Case 1. Big Oil
• Global integrated oil giant, with over 50,000 employees,
over $100 billion in revenues, and business in 180
nations.
• Spatial technologies applied enterprise-wide including in
exploration, transportation and storage, refining,
environment, marketing, supply chain, and strategic
planning.
• Spatial technologies are advanced technically in
exploration, with 3-D and modeling.
• The company has been using client-server based GIS in
its small corporate GIS group and in other specialized
groups scattered around the firm. It hasn’t consolidated
its GIS organizationally not linked GIS together through
an enterprise web bus.
• Overall, GIS is very strategic in tracking and taking on
IO’s competition at many levels.
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Case 3. Large Commercial Bank
• This bank headquartered outside the U.S. is one of the world’s
largest.
• The case-study interview concerns the USA division of the bank,
which puts emphasis on consumer and commercial banking.
Over the past five years, it has undergone major growth in its
USA branch network.
• GIS is used for branch siting and relocation, trade area analysis,
market share studies, and ad-hoc thematic mapping.
• The GIS group is very small with a traditional, client-server setup.
• A strength of the spatial group is the strength of spatial data
holdings on customers, branches, and associated demographic
attributes.
• GIS is not regarded as strategic and competitive. It’s not in the
strategic plan and the executives are not focused on it. The
small GIS group is aware of its potential but has not yet been
able to convince bank management and strategists of its
competitive importance.
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Case 5
• This large private firm is the world leader in map publishing. GIS
permeates its workforce, from executives down to operations
personnel.
• GIS is used to create and update its map and electronic
products, direct store delivery (DSD) i.e. locating and stocking
retail outlines that carry its products, manage inventory including
as it relates to supply chain, and provide specialized maps to
marketing and planning departments.
• Most of the GIS users are internal, but some are external,
including industry users of electronic products and consumers
who utilize cell-phone and web map services. A recent webbased product is consumer-produced laminate wall maps. After
a customer requests what map area to produce, the map is
customized to high standards and express-shipped to him/her.
• GIS is integral to the firm’s competitive strategy, both in terms of
production of paper and electronic map products, and in optimal
siting and stocking of products in retail facilities and accounting
for the firm’s inventory spatially.
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Case 6. Lamar Advertising Corporation Locating Billboards in the United States
• Business Drivers:
– Advertising customers save money by choosing the billboard
locations with the maximum market exposure
• Solution:
– Lamar’s marketing workforce has access to web-based spatial
system that enable them to help customers select the best
vacant locations for their billboard in metro areas.
– That system narrows the sites to those with the most marketing
exposure.
– Maps are shown and photos can be added showing in detail the
views of the final set of locations.
• Issues:
– The data-bases and digital map layers need to be updated
continually, so the customer is being presented with the current
reality.
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Lamar Advertising
Company in
Baton Rouge,
Louisiana,
provides
customers with
alternative vacant
billboard locations
with maps,
photos, and
narrative
descriptions. This
gives the
customer more
information to
make a decision.
Source: ESRI, 2005
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Case 7. Western Exterminator
Case Study
• Western Exterminator is a privately owned pest control firm with
650 employees in 3 western states (CA, NV, and AZ).
• It uses traditional desktop GIS, combined with an ESRI ArcWeb
Services subscription. That service provides demographic,
geographic, and other data-sets, and is updated constantly by the
service provider, ESRI.
• Main use is to plot customers and attributes associated with them,
especially demographic and business.
• Another use is to re-align routing of sales people. Each sales
person has 100-300 customers, so the sales person is better able
to optimize routes.
• Also used for improved siting decisions on new service centers,
taking into account the existing 33 centers and competitors’.
• This spatial set-up has no links to WE’s ERP, CRM, webenterprise, or location-based systems.
• The moderate strategic advantages are to target homeowners,
locate service centers, and recognize underserved areas.
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Case 8 Prudential Preferred Realty
• The firm is a Chicago-area residential real-estate brokerage
firm, with an agent staff of 500. It’s a franchise of Prudential
Insurance. GIS’s primary use is for map listings for customers
and consumers. Internally, it’s applied for demographic
analysis of zones to see what areas have more selling over
time and for agent performance profiling by area.
• The spatial applications are entirely based on an enterprise
web architecture. The consumers and customers have been
attracted by the competitive web portal that allows them to
search and view properties with convenient tools and imagery
of the city areas, amenities, and properties themselves.
• Spatial is strategic, since it’s a technology in this industry for
now that allows Prudential Preferred to stay “ahead of the
pack.” Strategically it allows the firm to create customer
loyalty by robust, repeatable spatial services. This competitive
importance of spatial is not formalized in a written plan but the
firm generally does little written planning.
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Case 9. Garmin
• Garmin, a medium sized international firm, purchased
MotionBased (MB) Technologies in Sausalito, CA, is a small
spatial firm, in Oct. of 2005 and it became a Garmin division.
• It provides spatial web services and analysis for endurance
athletes, such as runners, climbers, and sailors worldwide.
– A typical user is an endurance athlete, who wears a Garmin
or other GPS-enabled mobile device during training
sessions.
– Data are recorded 4 data points -- 3-D + time. Uploaded to
MB’s web server.
– Web server performs profile analysis of the individual
athlete, as well as comparison with aggregate results from
data-warehouse of the population of athletes. These
analyses give tabular and map results to the desktop, but do
not yet provide maps back to the mobile unit.
– 10 percent of customers elect to develop their own
application user interfaces (APIs), but their customer data
are still added to the MB’s web-based data warehouse.
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A current MB goal is to deliver performance maps and
tables back to the mobile device, for viewing during
training.
====================
Quote from Clark Weber, manager of
Garmin’s MotionBased Division, “Yes but
web services more important…[than GIS
and spatial technologies]….. It [Garmin]
purchased MotionBased for web services
expertise.”
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Results: Size of Firm not Tied to
Strategic Level
• Size of firm has no consistent association with strategic
level in the framework. Some small firms such as
MapGistics and MotionBased Technologies have
centered their business on spatial products and services
from their founding, so spatial is immediately strategic.
• Larger firms are older; many were founded decades
before GIS was invented. Their adoption of spatial
technologies has progressed more slowly over time
through stages of growth, as outlined by Nolan’s stage
theory in Chapter 3.
• Medium-sized firms are in between these, and tended to
have adopted and elevated the importance of GIS and
spatial in shorter time spans than the large firms, for
instance Chico’s and Lamar Advertising.
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Results: Strategic Level Not Related to
Extent GIS is Customer-Facing
• Strategic level is not related to extent that GIS is
customer-facing. This may reflect that many GIS and
strategic spatial applications for the case firms tend to be
more intensive internally than externally.
• Examples of internally-focused cases are Global
Integrated Oil, and Rand McNally. However, extent that
GIS is customer-facing does relate to type of industry.
• Consumer services, billboard advertising, newspapers,
and retail are industries that often serve their customers
directly with GIS.
• By contrast, the oil and utilities industries are more
proprietary about retaining geographic information for
inside use.
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Results: Strategic Level Related to
Extent of Geography in the Business
• Spatial strategic level is positively related to
extent of geography in the business.
• Extent of geography in the business is also
keyed to industry characteristics. For the twenty
research cases, those with the largest
geographical component come from oil and gas,
utilities, real estate, insurance, retail, and
consumer services, while geography is less
important for banking and consulting.
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Results: Strategic Level Related to
Spatial Web Platform
• In comparing the extent the twenty firms are highly
strategic in GIS to the adoption of spatially-enabled
enterprise-wide web integration platforms, the two
attributes are highly associated for this sample.
• This strong tie confirms a premise of the book that the
spatially-enabled, enterprise-wide web integration
platform is the direction that spatial technologies are
moving to achieve competitive results.
• This finding is explained by Porter’s theory that justifies
the advantages of the internet to successful corporate
strategy (Porter, 2001). Examples: Prudential Preferred
Realty and MotionBased Technologies.
• IT strategic alignment theory reinforces that the spatialweb-integration platform corresponds to a corporate
strategy of e-business (Porter, 2001
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Drawing the Best GIS Strategies
• The implication from the 20 research case studies is that
a company should evaluate its industry to determine how
suitable it is to spatial technologies, as well as to gauge
how much competitive advantage these technologies
offer the firms in the industry (Hagel and Brown, 2001).
• A firm should consider deploying spatial applications on
web-services platforms, as long as it can rationalize the
investment from a cost-benefit standpoint and support it
technologically.
• A managers should assess how naturally geographical
its business is, to help in determining the strategic
potential of GIS for his/her company. Once underway
with GIS, corporate management should consider
evolving the applications to an enterprise-wide webbased platform.
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Practical Implications of Alignment
of GIS and Corporate Strategy
• Another practical implication of the cases for managers
is that the alignment of GIS strategy with corporate
strategy is recommended, but with a difference. GIS
applications need to be aligned with corporate strategy
and also with IT strategy.
• For most firms, GIS and IT are separated, so
coordination of their strategic planning might be
problematic. Norwich best represents this problem. It has
had limited coordination and communication between
GIS and IT. On the other hand, for firms such as Sears
and Rand McNally, GIS and IT work together well
including in coordinating strategies.
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A Note on Government GIS
• Government units are less competitive, but
still must have strategy in place in order to
excel among their many peers, achieve
public support, and resources to develop GIS
and spatial applications further.
• The same principles apply to government as
covered with private sector examples, except
“competition” is replaced with “excel as a
technology and among peer government
entities.”
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and Sons
Summary
• Spatial technologies are growing rapidly in business and
present new research territory for IS and other academic
business researchers. Spatial IS published research has so
far been slight.
• Many general and known IS concepts and theories can be
applied, but they need to be significantly modified by
considering geography and spatial methods.
• Traditional GIS is still important, but spatial technologies
today are expanding to include enterprise, location-based,
and web-service integration platforms
• The study shows that there is a relationship between
adoption of spatial enterprise web approach and higher
strategic level for spatial applications.
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Summary (cont.)
• A classification framework is given for the evolution of
spatial technologies in business.
• An interview research study was conducted of 20
business cases to validate the framework and suggest
relationships and point to future research.
• Results indicate that firms vary on spatial strategic
positioning based on 3 dimensions.
• Proactive management can effect successful spatial
applications with greater strategic impact.
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and Sons